United States v. Barnes, Larry ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-3583
United States of America,
Plaintiff-Appellee,
v.
Larry Barnes,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 CR 109--Rebecca R. Pallmeyer, Judge.
Argued April 26, 2000--Decided October 13, 2000
Before Bauer, Rovner, and Diane P. Wood, Circuit
Judges.
Diane P. Wood, Circuit Judge. Larry Barnes was a
real estate broker who strayed from the realm of
legitimate transactions into that of money
laundering. A grand jury returned an indictment
against him on February 17, 1999, for a single
count of attempted money laundering, in violation
of 18 U.S.C. sec. 1956(a)(3)(B), with respect to
a transaction that took place on February 18,
1994. He moved to dismiss the indictment on the
ground that the prosecutors waited too long to
bring their case, and thus that it was barred by
the five-year federal criminal statute of
limitations, 18 U.S.C. sec. 3282. The district
court found that the events of February 18, 1994,
were enough to support the case and thus rejected
his argument. After a one-day bench trial, the
court found Barnes guilty as charged; it later
sentenced him to 41 months in prison. On appeal,
he claims only that the indictment should have
been dismissed on timeliness grounds. We
disagree, and affirm the judgment of the district
court.
I
Barnes worked as a broker for the Amaris
Mortgage Company in the Chicago area. On January
24, 1994, as part of a criminal investigation
being pursued by the Internal Revenue Service, a
confidential informant introduced Barnes to one
"A.J.," a purported drug dealer interested in
buying real estate with "unreported income." In
fact, A.J. was undercover IRS Special Agent
Anderson Jackson, who was wearing a recording
device. The informant frankly told Barnes that
A.J. wanted to use drug money and an assumed name
for his property purchase; Barnes indicated that
he understood and that he did not care about the
source of A.J.’s money.
Once the introductions were complete at the
January 24 meeting, Barnes offered A.J. an
apartment building for $79,000 and a single-
family home for $25,000. A.J. expressed interest,
whereupon the three went to view the properties.
En route, Barnes explained that, by purchasing
the properties, A.J. could "wash" his money so
that he could claim he had legitimate income from
the real estate, and that he could later invest
additional illegitimate funds with income from
the properties and claim that everything was
legitimate. When A.J. expressed fear about
getting caught laundering money, Barnes assured
him that everything was "covered." After viewing
both properties, A.J. agreed to buy them.
Barnes and A.J. next met at Amaris Mortgage on
February 4, 1994. There the two both discussed
the mechanics of money laundering further (both
generally and how Barnes planned to handle the
particular transaction) and they began preparing
the paperwork for A.J.’s two purchases. Later
that day, they met with an attorney in Barnes’s
office. Barnes instructed the attorney to prepare
a "$29,000 transaction," to disregard the source
of the "front money," and to structure the deal
so that A.J. would pay in installments at an
interest rate of 8.5% with a five-year
amortization period. Uncomfortable that A.J. was
asking too many questions in front of the lawyer,
Barnes took him away from the lawyer’s presence
and explained his plan further. He suggested that
A.J. put $1,000 down on one of the properties and
pay the balance in cash, even though the
paperwork would show that the balance was to be
paid in installments. A.J. then requested that
the title be put in the name of "Andrew Jackson,"
and on that basis Barnes ordered the title
commitment. Barnes then suggested that A.J. make
a $50,000 down payment at a meeting scheduled to
take place the following week. A.J. agreed,
noting that he first had to travel to Miami to
"square up something," but that he would return
in a few days with the money.
Notably, everything we have described up to
this point took place more than five years before
the indictment was returned. Only the events of
the last encounter between Barnes and A.J., which
occurred on February 18, 1994, came in under the
limitations wire. We therefore pay particularly
close attention to what happened on the 18th.
A.J. met with Barnes on the 18th, claiming to
have $100,000 in cash from a 75-kilogram cocaine
deal in Florida, and bragging that he had made
$1,500 per kilogram. Ever the accommodating
broker, Barnes replied that he could get rid of
the money "real quick . . . through his
business." Unfortunately, however, the attorney
with whom the two had met on February 4 was in
court. Barnes, unwilling to wait for the plum he
thought he was about to get, immediately called
another attorney to set up a real estate closing.
The second attorney was also unavailable, but
Barnes was able to leave a message with his
assistant indicating that Barnes needed to set up
an "emergency" closing that afternoon and asking
the attorney to prepare the necessary paperwork.
Barnes also told A.J. that he would adjust the
paperwork to show a purchase price of $30,000 and
that the remaining $70,000 would be a "payoff";
he suggested to A.J. that if the latter were ever
questioned about the low selling price, he could
say that the properties were causing a headache
to the seller and that the seller just wanted to
unload them. Barnes expected, however, the full
$100,000 as the true down payment. With these
matters settled, Barnes and A.J. adjourned to a
local restaurant for lunch while they waited for
the second attorney.
On the way to the restaurant, A.J. told Barnes
that his drug source was a "cocaine farm" and
that he had received the extra $50,000 "from a
Colombian." Over lunch, Barnes continued to tout
his ability to shift money around so that no one
could trace it. He described how he had set up a
series of different corporations and used their
tax identification numbers in lieu of his social
security number to open up four separate bank
accounts. These accounts, he thought, would be a
good place to store A.J.’s cash, using a series
of small deposits to avoid IRS reporting
requirements. He also suggested that he could
help A.J. launder future drug money by helping
him buy a business franchise, such as a gas
station or a car dealership. When they finished
their lunch, the two left the restaurant,
ostensibly heading for the lawyer’s office. At
that point, federal agents performed a mock
arrest of A.J. to extract him from the operation.
The following day an IRS agent questioned Barnes,
but did not arrest him.
II
Four years and 364 days later, the grand jury
indicted Barnes for attempted money laundering.
Barnes, who had not had contact with the
government since the day after A.J.’s "arrest,"
moved to dismiss the indictment, claiming that
the prosecution was barred because the charged
conduct occurred on February 4, 1994. The
district court deferred ruling on the motion, and
then denied it after the bench trial, where the
government presented evidence of Barnes’s
activities on each of the three critical days:
January 24, February 4, and February 18, 1994.
The court found that Barnes had committed all of
the acts constituting elements of the attempted
money laundering offense charged in the
indictment on February 18, 1994; it accordingly
denied the motion to dismiss and, as noted
earlier, found Barnes guilty as charged.
Although we review de novo the question whether
the statute of limitations has run, see United
States v. Anderson, 188 F.3d 886, 888 (7th Cir.
1999), the question whether the district court
properly found that there was sufficient evidence
to show that Barnes committed the complete
offense of attempted money laundering on February
18, 1994, is one that receives the highly
deferential review reserved for evidentiary
challenges to criminal convictions, see United
States v. Richardson, 208 F.3d 626, 631 (7th Cir.
2000); United States v. Griffin, 150 F.3d 778,
784 (7th Cir. 1998).
Barnes sees the attempted money laundering for
which he was indicted as a continuous string of
actions that began on January 24 and was complete
no later than February 4. Since all elements of
the offense were in place by February 4, that is
the latest date from which the statute of
limitations could run in his view, no matter what
he may have done later on February 18. He also
argues that the February 18 transaction cannot be
seen as a separate, stand-alone instance of
attempted money laundering, because on that day
Barnes never took a substantial step toward
conducting a financial transaction. Last, he
urges us to reject the government’s alternative
theory, which is that money laundering is a
continuing offense for which the statute of
limitations keeps running until the crime
expires. See, e.g., Toussie v. United States, 397
U.S. 112 (1970).
In our view, the district court’s conclusion
that the February 18 events taken by themselves
established that Barnes attempted unlawfully to
launder money is supported by the evidence. We
thus have no need to consider the question
whether money laundering can fit within the
narrow confines of the "continuing offense"
doctrine recognized in Toussie. See also United
States v. Yashar, 166 F.3d 873 (7th Cir. 1999).
Nor is it material, in our view, that the
government might also have sought an indictment
that focused on his activities on February 4, if
it had acted with more dispatch than it showed
here. A defendant has no right to choose which
illegal conduct the government selects to
prosecute or how that conduct is charged. Cf.
United States v. Armstrong, 517 U.S. 456, 464
(1996) (as long as the prosecutor has probable
cause to believe that the accused committed an
offense, the decision whether or not to prosecute
and what charge to present to the grand jury
generally rests entirely within her discretion,
subject only to constitutional constraints).
To convict Barnes of attempted money laundering,
the government had to prove beyond a reasonable
doubt that he attempted, with the intent to
conceal or disguise the nature, location, source,
ownership, or control of property he believed to
be the proceeds of specified unlawful activity
such as dealing in narcotics or other dangerous
drugs, to conduct a financial transaction with
property represented to be the proceeds of
specified unlawful activity. See 18 U.S.C. sec.
1956(a)(3)(B). To prove the "attempt," the
government had to show that Barnes acted with the
specific intent to conduct the financial
transaction described in the substantive statute,
and that he took a substantial step toward
completion of the transaction. See United States
v. Cea, 914 F.2d 881, 887 (7th Cir. 1990); United
States v. Rovetuso, 768 F.2d 809, 821 (7th Cir.
1985).
Barnes does not contest the fact that he had
the specific intent to commit money laundering on
February 18, but, he urges, he did not take a
substantial step in furtherance of the crime on
that date. No paperwork for the closing was
prepared, no money actually changed hands, and no
meeting with the attorney ever took place.
Even if we agreed that those facts were not
established, however, we cannot conclude that the
steps Barnes did take were not substantial. A
substantial step is something more than mere
preparation, but less than the last act necessary
before the actual commission of the substantive
crime. Rovetuso, 768 F.2d at 821. In determining
whether a person took a substantial step in
furtherance of a crime, the court should focus on
the acts he took to complete the crime, not on
those still to be done. Id. at 821 n.12. The act
must be of such a nature that a reasonable
observer viewing it in context could conclude
beyond a reasonable doubt that it was undertaken
in accordance with a design to violate the
statute. Id. at 821.
In this case, Barnes took the following steps
on February 18: he placed a call to an attorney
for the purpose of setting up an immediate real
estate closing for the sale of the two properties
in exchange for money he believed to be the
proceeds of illegal narcotics sales; he
instructed the attorney’s assistant to set up the
meeting for later that day and to see that the
paperwork would be ready; and he was on his way
to that meeting, with the purported buyer, at the
time of his arrest. A reasonable observer could
conclude that these steps were substantial and
that they were undertaken in accordance with a
design to violate the statute. Compare Cea, 914
F.2d at 888. It is no defense that, unbeknownst
to Barnes, completion of the illegal plan was
impossible. See United States v. Coffman, 94 F.3d
330, 333 (7th Cir. 1996). By placing the call to
the attorney, giving the instructions, and
heading for the attorney’s office, Barnes
demonstrated that he was prepared to complete the
transaction that day and that he would have done
so but for A.J.’s "arrest." In that sense, this
case is like United States v. Mims, 812 F.2d
1068, 1078 (8th Cir. 1987), in which the Eighth
Circuit found that the evidence was sufficient to
find the defendant guilty of attempt where events
had moved beyond the preparation stage and would
have resulted in the completed crime but for the
government’s intervention.
Although the district court looked at the
activities of January 24 and February 4 in coming
to its conclusion, this was not improper.
Relevant pre-limitations evidence is admissible
to show the existence of a scheme to complete an
illicit transaction. United States v. Wellman,
830 F.2d 1453, 1464 (7th Cir. 1987). Here,
Barnes’s pre-limitations activity was relevant to
interpret the meaning of his call to the attorney
to set up the emergency meeting.
III
We therefore conclude that the evidence was
sufficient to prove that Barnes committed the
offense of attempted money laundering, as charged
in the indictment, on February 18, 1994. Because
the indictment was returned on February 17, 1999,
it was within the five-year limitations period
established by law. The judgment of the district
court is Affirmed.